Imagine a world where you can send money directly to someone without using a bank — in seconds instead of days, and you don’t pay exorbitant bank fees. Imagine a world where you can send money directly to someone without using a bank — in seconds instead of days, and you don’t pay exorbitant bank fees. Or one where you store money in an online wallet that is not linked to a bank, implying that you are your own bank with complete control over your money. You don’t need permission from a bank to access or move it, and you never have to worry about a third party taking it away or a government’s economic policy manipulating it.
Blockchain technology is still a mysterious or even intimidating topic. Some people even remain skeptical that we’ll ever use this technology in the future. This skepticism is understandable given that blockchain technology is still in its early stages of development and widespread adoption. Blockchain is a distributed ledger that powers bitcoin. Satoshi Nakamoto invented bitcoin, and blockchain was the key component. Blockchain is highly secure and is based on a decentralized consensus algorithm in which no single entity has complete control.
Things that make blockchain technology important are the ideality for delivering that information because it provides immediate, shared, and completely transparent data stored on an immutable ledger that can only be accessed by network members with permission. A blockchain network can track orders, payments, accounts, production, and a variety of other things. And, because members have a unified view of the truth, you can see all aspects of a transaction from start to finish, giving you greater confidence as well as new efficiencies and opportunities.
There are several key elements used in blockchain technology:
- Distributed ledger technology : The distributed ledger and its immutable record of transactions are accessible to all network participants. Transactions are recorded only once with this shared ledger, eliminating the duplication of effort that is common in traditional business networks.
- Immutable records : After a transaction has been recorded to the shared ledger, no participant can change or tamper with it. If an error is found in a transaction record, a new transaction must be added to reverse the error, and both transactions are then visible.
- Smart contracts : A set of rules, known as a smart contract, is stored on the blockchain and executed automatically to speed up transactions. A smart contract can specify the terms for corporate bond transfers, as well as the terms for travel insurance payments, among other things.
Here’s how does blockchain technology works:
- As each transaction occurs, it is recorded as a “block” of data.
These transactions demonstrate the movement of an asset, which can be tangible (a product) or intangible (a service) (intellectual). The data block can store any information you want, including who, what, when, where, how much, and even the condition — for example, the temperature of a food shipment.
- Each block is connected to the ones before and after it.
As an asset moves from one location to another or ownership changes hands, these blocks form a data chain. The blocks confirm the exact time and sequence of transactions, and they are securely linked together to prevent any block from being modified or inserted between two existing blocks.
- Transactions are blocked together in an irreversible chain: a blockchain.
Each additional block strengthens the previous block’s verification, and thus the entire blockchain. This makes the blockchain tamper-evident, providing the vital strength of immutability. This eliminates the possibility of tampering by a malicious actor — and creates a trusted ledger of transactions for you and other network members.
As a member of a members-only network using blockchain, you can be confident that you are receiving accurate and timely data, and that your confidential blockchain records will be shared only with network members to whom you have particularly given permission. All network members must agree on data accuracy, and all validated transactions are immutable because they are permanently recorded. A transaction cannot be deleted by anyone, not even a system administrator. Time-consuming record reconciliations are eliminated when a distributed ledger is shared among network members. A set of rules can also be stored on the blockchain and executed automatically to speed up transactions. So, would you give it a try?
Written by Rania Salsabila
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